An easy to read guide to explain our “Assigning Contract Terms System”.
A system designed with the Home Owner, and the Tenant/Buyer in mind. Everyone Wins!
For the Homeowner who NEEDS TO Move a property in today’s market, but cannot because of the following:
- The property needs repairs.
- Can’t afford to list the property for over market value to get it paid off and pay the Realtor.
- Too much owed on the property.
- The Real Estate Market just is not moving properties.
What is an Assigning Contract Terms Deal?
The Homeowner agrees to Option the property to us. This means that we would then have the Option to buy the property according to the terms on the Option Contract.
We then either close the deal with the Homeowner or Release our Option Contract to someone who wants to “step into our shoes” and take over the Contract and close the deal with the Homeowner.
Are there different types of Terms that can be Assigned?
Yes, we can agree to any terms with the Homeowner. The main thing to remember is, “If we can agree on the Price and Terms, is there any reason we cannot do business?” If the answer to that question is “NO”, then we have an Agreement!
Our specialty is finding Tenant/Buyers who are looking for properties with “TERMS”. You have to remember, in today’s economy, 80% of the Buyers cannot qualify with a lender or have the cash to buy a property. That is why our ACTS Program is so successful!
What Homeowner is using the ACTS Program?
The Homeowner who is financed fully to market value and maybe a little more.
The Homeowner who cannot list above market prices to get the mortgage and Realtor paid.
The Homeowner who is trying to sell “For Sale By Owner”.
The Homeowner whose property is a little “weird” or needs repairs and or updates.
The Homeowner who has lost their job, divorce, loss of a loved one, etc.
The Homeowner who inherited a property
The “tired landlord” who just wants rid of the problem.
The Homeowner who bought another home and needs to get rid of this one.
Example of an ACTS deal:
- Homeowner has house worth $100k, owes $100k
- 25 years left on mortgage PITI of $850/month
- Homeowner just wants out! Get this thing off my back!
- Solution: We would then Option to Lease/Option for the balance owed to lender and the remainder of the terms of the mortgage.
- We then go to work and find that New Homeowner who is wanting a property like yours and is willing to take over the Option Contract.
- The New Homeowner would make a lease payment to you equal to your Principle, Interest, Taxes, and Insurance on the property every month.
- The New Homeowner then has the right to buy the property for the amount owed to the lender whenever they decide to purchase the property. This could be in a year, 5,10,20, or even at the end of the 25 years that are remaining on the underlying loan.
What are the benefits of doing an ACTS Program with us?
With giving us “Terms”, we are able to locate the New Tenant/Buyer usually within weeks, not months or longer with a Realtor.
This technique works great with properties with little, no, or sometimes with a little negative equity.
If you listed, marketed and sold today with a Realtor, there is a good chance you would have to bring “CASH” to the closing to sell your home. We eliminate that and move that closing on into the future when hopefully you can plan on that closing and be more prepared.
If you cannot make the payments, the home will go into foreclosure. This program eliminates the need to have foreclosure as an option.
The New Homeowner will enter into a Lease/Option with us or you if we Release the contract to them. This is a “Hybrid” Lease/Option, so no need to worry about being a Landlord. All repairs and maintenance are passed onto the New Homeowner! All you have to do is collect the lease payment and pass it onto your lender every month to make your loan payment.
Our closings with the Tenant/Buyer are usually within weeks. We have a VIP list of Tenant/Buyers that is growing by the day. Remember 80% of the buyers cannot go the conventional way of buying thanks to the economy and the Banks! We are giving them an alternative that is helping Homeowners and Buyers across America!
What are the most common concerns about doing ACTS Program Deals?
You will still own the property and the loan. Someone else will be making the payments and be taking care of the property for you.
The Tenant/Buyer could default. The Tenant/Buyers are all prescreened. The goal is to set them and the Homeowner up for success. Life does happen and sometimes the Tenant/Buyer will not be able to move forward with actually buying the home. The beauty of using the Lease/Option is that if this does happen and the Tenant/Buyer does not leave on their own, the Homeowner just has to evict them. This is a lot less involved than foreclosure which could take a lot more money and time.
Like stated above, the Homeowner still has the loan in their name. The Tenant/Buyer will be paying rent to pay the loan. The alternative is for the Homeowner to come out of pocket and make payments on a house they do not want or live in, or go into default. ACTS is your best alternative.
Most Homeowners want to sell fast and at a premium. In today’s market and economy, that is not always possible. That is why ACTS works so well.
What does it cost the Homeowner?
Usually the only fee is the document preparation fee the attorney charges. This is usually a very nominal fee.
Once the Tenant/Buyer exercised the Option to Buy part of the Lease/Option, then there is a closing and transfer of Title. At that time the Homeowner will have their “normal and customary” closing costs. It is recommended that you save up for this so it is easier to pay when the time comes. These costs, usually about 3% of the market value at time of purchase or less, are unavoidable. This is the state, county, title, and attorney fees.
OK, I like what I am hearing about the ACTS Program, what do we do next?
Any questions you have, please ask. We want you to be a fully prepared Homeowner.
Our Acquisitionist will have the documents for the Option Contract prepared and will make arrangements to meet with you to get them signed.
We will then determine if we are going forward with the Contract terms ourselves or offer the contract to our VIP Tenant/Buyers list and find that Tenant/Buyer that will work best.
When that Tenant/Buyer is found, we will have the attorneys contact you, and the tenant/buyer to schedule the signing of the contract closing.
You will need to change your homeowner’s insurance policy from an owner/occupant policy to a landlord policy.
The tenant/buyer then takes over the property and that’s it!
Documents needed for an ACTS deal.
We will need your recent statement on the underlying loan(s).
We will need the loan documents as well. We need this to see exactly what kind of loan you have and the terms of the loan. (remember, it is an Assigning Contract Terms deal?”
We need a filled out Seller’s Property Disclosure form from you. This tells everything you know about the property. All Real Estate Transactions require this.
We will do a Title Search on the property.
We need a copy of the survey if you have one.
Any additional documents that may be required by the Tenant/Buyer, or attorney.
Here is what we do:
Work with Homeowner:
We will process all property information and determine what program to fit it into.
We will present Tenant/Buyers to you if we are Releasing the Contract.
Provide this brochure to you.
Generate the Option contract and Seller’s Disclosure.
Meet with you to get the Documents signed.
We provide creative solutions to Homeowner’s unique situations. We are associated with a nationwide group of investors who have done over 2000 creative deals.
Make arrangements with the attorney for you to meet for the closing.
Work with the Tenant/Buyer:
Provide this brochure to the Tenant/Buyer.
Make arrangements with the attorney for the Tenant/Buyer to meet for the closing.
We work closely with our attorneys for the closing:
We provide information to the attorneys that we have gathered from Homeowners and Tenant/Buyer.
We work to coordinate the document signing with the attorney, Homeowner, and Tenant/Buyer.
Q & A
What are my options for the property?
If your property has little or no equity, then ACTS is our only solution.
If it is Free and Clear, we could negotiate a Seller Financing offer with you. Why not YOU be the lender and make the BIG money instead of the banks?
If you have some equity, say at least 20%, then we would offer you a Seller Held second Mortgage and you can take your equity in monthly payments.
You could refinance the property and pull your equity out and then we could do the Lease/Option for the remaining term and balance on the new loan.
How long will I still own the home and the loan?
Remember that the terms are that it is a lease/option for the remaining term and balance on the loan. So you could still own the property and loan for the remaining term on the loan you originally agreed to with the lender. The Tenant/Buyer will be made aware of the benefits to them paying off the loan and owning the home themselves. Ultimately it is up to them.
What about my Credit?
Well, if you were to default on the loan, it would have a negative effect on your credit. However, with the ACTS Program, you will have the Lease payment to make your loan payments every month, thus having a positive effect on your credit.
How long can I stay in the Home?
You can stay till the document signing with the Tenant/Buyer. At that time you have to move out and the Tenant/Buyer moves in.
How do we make sure the payment to the lender is made?
The Tenant/Buyer makes the “Rent” payment to the Homeowner. The Homeowner is to then pay the Lender, taxes, insurance. The Homeowner then provides proof that the payments are being made to the Tenant/Buyer. Of course you could always contract a property management company to handle these details at a nominal fee every month.
Can you make money on the deal?
In most cases the answer is no. There is usually little, no or negative equity for the Homeowner to make.
If there is some equity that we agree to pay, we can do that with a seller held second mortgage.
OK, so what am I going to have to pay for?
Typically, the document preparation fee to the attorney for the Lease/Option documents with the Tenant/Buyer and then the Seller Closing costs when the Tenant/Buyer exercises the Option to Purchase and buys the property. That is all, you pay us NOTHING!
Ok, I want to move forward. How long will this take?
We do not have a crystal ball. From past experience, these types of deals usually take no more than 12 weeks and usually a lot sooner.
Our success rate in finding that Tenant/Buyer is very good! We cannot guarantee we will be successful, but rest assured we will do everything we can to find them.
What do I do if the Tenant/Buyer quits making payments?
You can ask them to leave, or evict them if necessary. This is not a very lengthy process. The attorney will be available to assist you if necessary.
Call us and we will be happy to do the process over again.
What if they damage the property?
The Lease/Option gives them the property to treat as their own. Usually this gives them some “Pride in Ownership” so they treat the property better than a renter would. They are under contract to not do any damages to the property. So there is always a contract issue there that can be directed to your attorney.
Don’t forget, you also have insurance on the property that may come into play.
Last but not least, we could Option the property again and start the process all over. Repairs can be made or we would option to take it “As-Is”.
I might consider declaring Bankruptcy. What then?
The documents that you sign with us or the Tenant/Buyer exclude the property from any bankruptcy. It cannot be included in any bankruptcy proceedings. This is to protect you and us or the Tenant/Buyer.
What about interest deductions for our loan?
You will still be making the payments on the loan. Thus the 1098 interest statement that the lender will send you can claim. Please consult a Tax Professional.
Can I buy another property while I still own this one?
Everyone’s credit worthiness is different. This will be up to a lender when you apply for another loan. Many people, investors included, have numerous loans on real property.
Explain to your loan officer that you are renting out the property and you have income to offset the loan. This could help in their determination.
You could always look at what properties we have available in our ACTS Program. There may be one that we have that you might want and YOU could do a Lease/Option as a Tenant/Buyer on it!
Who are our Tenant/Buyers?
Our typical Tenant/Buyer is someone who wants to own a home, but for credit issues, or not enough down money, cannot qualify with a lender. We also have investors, looking for properties for they are limited as to how many loans they can qualify for. Some are self-employed. Being self-employed the criteria for a mortgage is sometimes so tight, even with great income people do not qualif. Another thing that is causing our pool of Tenant/Buyers to grow is the economy and the Banks. The banks have lots of money, they just are not lending. They have tightened up their lending requirements so much that only 20% of the buyers can actually qualify for and get a loan!
What about my neighbors finding out?
That is up to you. We will want a “For Sale By Owner” sign in the yard to help us find the Tenant/Buyer. There will not be a transfer of ownership till the Tenant/Buyer actually does buy it. So it is still your property, you just will not be living in it.
What if my property is listed with a Realtor?
We will not work with properties that are under contract with a Realtor. You can let them work at trying to sell the home. Once their listing expires and is cancelled call us. At that time, maybe we can help.
To submit your property for us to review for the ACTS Program please call:
856-541-1404